A vulture capitalist fund called Elliott Management, led by billionaire CEO Paul Singer, announced plans last month to extract profits from AT&T by cutting jobs and selling off critical assets while pumping up the stock price with billions in share buybacks. CWA members will need to be ready to fight back against Elliott Management's anti-worker proposals.
CWA President Chris Shelton sent a letter to AT&T's CEO and board this week, and to the company's 100 largest investors, urging them to reject Elliott Management's proposals. CWA's analysis shows no evidence that Elliott's strategies have created long-term value for other companies. Hess and Roadrunner, for example, have both significantly underperformed the S&P 500 since Elliott became involved in similar scenarios.
The effect of Elliott's proposals on AT&T's workers is a primary concern for CWA. In the letter, Shelton noted that CWA has already been tracking job cuts at AT&T, which have been raising concerns about the company's ability to maintain its service quality with a well-trained, highly-skilled workforce. Noting recent strike actions by union members at AT&T, Shelton warned that a new and more aggressive strategy of cutbacks will make it more challenging to avoid further disruptions and to improve AT&T's employee engagement and satisfaction.
Shelton also sent a letter on Monday to members of the Business Roundtable – an organization of CEOs from several major corporations that recently made headlines when they signed an updated Statement on the Purpose of a Corporation recognizing that corporations have a responsibility to workers, customers, and community members, not just shareholders. In addition to AT&T CEO Randall Stephenson and AT&T board member KeyCorp CEO and Chairman Beth E. Mooney who both signed the Statement, six other CEOs who signed the Statement own approximately 16% of AT&T's shares, compared to less than 1% owned by Elliott Management.
"The cost-cutting measures that Elliott recommends, such as closing wireless retail stores and increasing outsourcing, would accelerate the loss of family-supporting jobs and the shift to using low-wage and potentially overseas contractors," wrote Shelton. He further warned Business Roundtable members that Elliott's recommendation to divest its wireline footprint could isolate rural America and that the aggressive stock buybacks proposed by Elliott would suppress investment in crucial initiatives like next generation wireless and fiber broadband networks, including networks for our emergency first responders.